Er, I think you're seriously confusing Saturnalia with Bacchanalia here. Latter was a Greek holiday, former a Roman one. Saturnalia had none of the "free from rationality" nonsense, Romans would set up evergreen trees with decorations, and exchange gifts.

No, I think you are missing the crucial part of what it means for something to be mystical. God is a bad concept not because we simply have no evidence for it. That's hardly the main importance here. The main importance is that we couldn't possibly ever have evidence for it, that his very existence and definition deny and negate the laws of reality and our means of epistemology that guide us through life. That to accept the notion of God to the fullest extent renders a person almost senseless, and certainly out of his mind. "God" is a denial not only of everything that is human, but of every human faculty that is used to live and succeed in the world. That's why it's vile, the concept of God. The actual fact of absence of proof is by contrast a mere secondary issue.
To put it succinctly, God and ghosts not only aren't, but couldn't have been. That is a crucial metaphysical identification.
Now, what is the nature of fantasy? Of dwarves and elves and unicorns? Not that they couldn't have been. Because they could, just as giants. They merely weren't. The accident of history, or evolution, produced creatures that we see today. It's like criticizing me telling you about gigantic fantastic ten-story animals. If I told you about them, would you blame me that we see none of them around us and thus my notion is mystical and anti-reality? What would you say when I showed you the first dinosaur bone?
The critical point that I'm trying to explain here is that fantasy is fundamentally different from mysticism and supernaturalism. As Fransisco said, words have a precise meaning; supernaturalism means exactly what it says -- going above reality, a violation and negation of it in a vile, incomprehensible sense. Fantasy is merely imagination, of what could have been.
Does that clarify what I am trying to distinguish between the two? To equate the two as saying that both we have no evidence for is to lose sight of their fundamental difference and incompatibility.

If you ask me whether there are any philosophical reasons to not believe in Greek gods, I will say: There aren't. And there are no reasons why there couldn't have been (any Greek gods). In the same way that the Greeks found huge enormous 18-ft bones, and said these were the bones of giants. There are no philosophical reasons why either giants or Greek gods couldn't have been. They violate no laws of reality.
See, this is where we disagree. It is my belief (and belief of men teaching their kids about Santa for the last 1,600 years) that very young kids have no capacity to distinguish a very serious make-believe from a very lightly told "X is real" story. The world is still far too incomprehensible for them, they exist in a world where huge parents and unknown objects and rules regulate how things are. What do they care, at that point, whether there's actually an ultra-benevolent grandpa with a white beard who makes sure they are good little boys, or whether it was simply a device invented by their parents and that Dad actually dresses up with a white beard to make the ethical points more valuable?
In other words, if you don't tell or try to convince the children of any reality-violating entities -- such as God, or spirits -- you can teach them just about anything. A unicorn is a natural, fantasy creature. It could have been, but merely wasn't. That's the significance of fantasy that I will further address in my post to aequalsa.
Okay, so you do concede that the metaphysics of Jesus-as-real are fundamentally different from metaphysics of Santa-as-real. But yet you apply "as-real" to both. Well which one is it? My whole point earlier was that no one teaches Santa in the same mystical way as Jesus, or tries to convince of his existence to the same extent, nor does Santa violate laws of reality in Jesus-like fashion. So that his existence presents no problem to a little 2-year old child.
Santa doesn't compel to good behavior, and actually neither do the parents. Santa helps influence and result in more good behavior. That's his purpose -- to make good behavior more rewarding (not just rewarding period), and to help inculcate more benevolence (not originate benevolence period). Parents do a lot of the same too, I agree. So why not have Santa join in, and support and reinforce the parents' decisions? Since he is unlike the parents in that he is purely benevolent and would never punish them, Santa is actually a more benevolent force than they are, and can carry a good deal of influence on a little child. That's why parents have been employing his services for all these thousands of years.
Order of relevance doesn't serve to undercut the items lower in relevance, does it? The very fact that the items are present in the hierarchy means they are important, by definition. I grant you that, and would never want to imply otherwise. But now we need to order the items. Which one is higher, ethics or metaphysics? Values or existence?
Well I'm sorry but "ethics AND metaphysics" doesn't quite answer my question. Objectivist epistemology demands that all values be in a hierarchy.

Yes, entirely. Thank you for rephrasing it, as it makes even more sense now. It is absolutely true that what I've said applies only to very young children, and I've said it a number of times that older kids will necessarily grow out of it, become too sophisticated to accept it, and move on to more complicated material.
No.
ESP and ghosts are, by definition, outside of our reality, contradictory to reality, etc; they are nothing but supernatural, and nothing but mystical. Unicorns, however, are not in this category. Unicorns are not supernatural, they are fantasy. Do you see that there's a fundamental difference between the two concepts?

Well, I'm not going to speak for Dr. Peikoff and his intentions here. I recommend that you get the lecture and judge for yourself. What I will say in terms of recommendation is that he described Greek religion as qualitatively different from modern religion, not just in details but in fundamentals.
As for why not teach it now -- not because it's mystical, but simply because we know it is not true, and that while birds do fly through the sky on the one hand, Helios does not. It's a scientific discovery, not a philosophic one. And for teaching Greek religion to little kids, nothing in principle wrong with it (as long as they don't start sacrificing sheep to Zeus). The only problem is that it's too big and too complicated. BUt if you take a few things to emphasize, there's absolutely nothing wrong about telling a little kid about gods and giants, about heroic tales and heroic deeds, in full seriousness. Just as you can tell the child about Santa Claus, you can tell the two-year-old child about this hero called Prometheus, or about a very strong guy called Hercules, etc. What do they care whether such men exist or not? It's in no way a violation of reality that they exist, and them existing in the child's mind fully allows him to learn from them much more than if they were fake stories that everyone knew were not true.
No I was looking for a side by side presentation of the two definitions, something like what you provided below.
Fine, you've satisfied my request but didn't talk about the most important part:
Please address that. I am fine with your definitions, except that Santa-as-real is fundamentally differently from Jesus-as-real, and that's the part that you hadn't commented on yet.
Inspector, these are characters. Not only do they have relevance only as late as the latest movie or book, and not otherwise, but they are qualitatively different in their role in life. They can hardly help the parent inculcate morality, and even more importantly they are far too mature for a 2-year-old boy. They are fit for a 10-year old or a teenager. What are you going to do for the first 10 years of a child's life to make sure he has his manners, is honest, and all that?
Inspector you're putting words in my mouth, I never said that values are provided by undercutting metaphysics. That's an important misunderstanding of my view. I have stressed to emphasize that Santa is not a metaphysically incomprehensible entity like a Christian God is; he's simply a benevolent ol' little grandpa-like figure, he moves around via a sleigh, he lives in an a physical place (the North Pole). If we as adults know he actually isn't there, that is merely a scientific question, not a metaphysical one.
But as for the bigger issue, I would never imply that undercutting metaphysics can serve proper values. Please don't attribute to me that view. What I did talk about was -- what should be of the first importance to us? the axiom A is A? Or some issue of values or principles? What is more important to our lives as human beings?

Yes, more specifically he said that the Greek religion was not mystical, and that it was not supernatural. That's about all the context that there can be gleaned from the lecture, because the substance and foundation for what he said lies in the Greek religion itself.
Let's define our terms. Is mystical = supernatural? Fine. How do we define supernatural? Something that contradicts or violates the laws of reality, or exists in a reality different and separate from ours. Given this definition, in what way was Greek religion supernatural? Precisely what's so mystical about Helios flying through the sky with his chariot? In what sense is it more incomprehensible than a bird flying through the sky? Go back to before the discovery of lift, before aerodynamics, and tell me whether you don't think all things flying through the sky are the same. Did Helios teleport from one place to another? No. Did he travel at actual infinite speeds? No. Did he exist in more than one place at any one time? No. So what's so supernatural here? And the same can be said for any part of Greek religion, all of it is natural. There was a great temple of Artemis that ended up being burned down in the middle of the 4th century BC, and people at the time wondered why the goddess let this happen if she was so powerful. Many years later Alexander the Great came to prominence, and when people traced down his year of birth, they discovered that it was on the very night that the temple burned down; so, they reasoned, since she was aiding Alexander the Great's birth that night, she let it happen because she couldn't be in both places at one time. Consider that for a moment.

Yes, because I cannot fathom the point of "myth taught as myth", in this context. If Santa doesn't exist, then what purpose is there to teaching about him at all? Like I said earlier, if we use Santa to teach certain things, then everyone knowing he's not real will lose all efficacy for those lessons. Either he's real, so that we teach a child benevolence and morality at an age when he's too young to understand but grows out of Santa on his own, or Santa is not real, it's just something people "do" or kids "know" so it passes for little more than a spurious story to tell a child one day, and nothing more. I observe that when the Greeks used their gods to teach morality, they treated them as completely real. Today we just read those myths for fun, and they are powerless to impress any profound lessons for us.

I asked you to consider Dr. Peikoff point, which you didn't. I asked you to show how any of this was mystical, and argued to the contrary. Yet you persist with the mystical monicker, in defiance of all That's like doing an ad hominem towards an idea, if such a thing was possible. I ask you to start from reality, from the actual facts of the case -- in this case, fine, Greek religion, and then proceeding with your judgment, rather than starting with a conclusion "religion is bad" and handing down judgments depending on how things pigeonhole this way or that. Sorry if this post seems a bit heated, I had (am still having) a very stressful day...
Please address the facts of the matter. Please define your terms ("mystical"). Please concretize your principles. I have a rather serious knowledge of Ancient Greek culture. If you can truly demonstrate to me that Greek religion was mystical, I will concede all arguments and... and cover my head in ash! But if you can't, if not all seriously believed fantasies are mystical as in your view, then there will be something rather profound for us to talk about (though I won't ask that you cover your head with ash in return ).

Okay let me jump back in here now that I have some time,
Okay I kept asking that we define our terms, especially "real" and "make believe" and you guys don't seem to want to. So now that we have mired ourselves in this conundrum, I ask you to please define what you mean by "make believe", what you mean by "real" (in reference to Santa), and whether you draw a distinction between how mystical families teach that God is real, and how they teach that Santa is real.
The question then begs itself: why have Santa at all? If they know it's you, and you hint in no uncertain terms that Santa is just something they shouldn't really pay attention to any way, then what the heck is the point in the first place? Why not dispense with all cultural fairy tales completely (ones that you insist are mystical, but which I maintain are completely absent of mysticism)?
Also, how would you explain Dr. Peikoff's phrase of "secular religion" in relation to the Ancient Greeks, and would you come down with the same vehemence against teaching young Greeklings about Zeus as you do against teaching tiny little Americans about Santa Claus? Dr. Peikoff discusses the nature of Greco-Roman religion in his ARB lecture, "Why Greece Is My Favorite Civilization", and I strongly recommend you guys take a listen.
What's wrong here, the big picture, is that you are willing to deprive a person of benevolent values, in some hypothetical apprehension about mysticism. In no uncertain terms, you treat metaphysics as superior to ethics and values, rather than being merely hierarchically antecedent. And if you do, then there's a far deeper problem than merely what to do about Santa Claus.

Well then we have a more fundamental disagreement here than merely Santa Claus. Do you think there's any point to the birthday celebration, according to the above standards? If there's a day when a child gets "stuff he didn't earn", it's the birthday, when he receives gifts for absolutely nothing at all. Also, would you do away with the New Year celebration? There are many existential holidays in US culture, and it seems your standards would be far too strict for practically all of them.

SN, notice that 8 years is really pushing it for Santa Claus and tooth fairies. I remember I was already growing out of Santa Claus idea by 7 or so, and was far too "sophisticated" by 8-9 to seriously accept such an idea. So instead of 8 year old children, I'm talking about 2-3-4 year old children here, real babies. Their cognitive thinking is in its infancy, literally, so what are we to do to teach them proper rules of behavior, and instill even more benevolence in them? Why not have a super-benevolent grandpa figure that always rewards them with wonderful gifts for being a good boy, even when they don't think their parents saw the good behavior and thus nobody noticed?
I know what you mean, and of course I would never say that we have to teach Santa Claus. I merely said that those that wanted to, should have no reason not to. To counterbalance your argument, I keep thinking about John Adams teaching his little boy about Santa, without there being any moral confusion about lying. You have to remember the enormous historical backdrop to Santa and to tooth fairies, centuries of more benevolent ages than ours, teaching the kids the same old benevolent stories.

With all due respect, I think you guys are dropping the context here. The context is not that we should teach Santa Claus to adults; that has never been the point. So you have to ask yourselves the question, what fundamental difference is there between teaching Santa to an adult, and teaching him to a child. And the answer is that a child is simply too ignorant about the world to care, or for it to make a difference to him whether an actual Santa exists or not. It's much in the same way as why Dr. Peikoff called the Greek religion a secular religion, as it was not based on any negation of reality, merely a hypothetical addition to it. That's what Santa is, a guy that could exist. Notice that when children start asking, "But how can Santa visit everyone on Christmas Eve", this is not a happy moment for the parents. They are not eager with joy to explain the mystical elements and make Santa totally incomprehensible. Instead, he starts out totally comprehensible, to the mind of a small child, and when the child grows up enough to start seeing problems with the Santa idea, then that means he merely grows out of it. The point, the context, is that we are teaching about Santa to a small child only, and at an age when he doesn't care or does not notice yet any possible holes in the story. The benefits of this teaching we already all agreed upon, namely the benevolence, and my point about teaching morality.
So the last issue is Inspector's, "I just don't agree that it is in any way necessary or gainful to present the myth as real." For Santa to have any authority as an actual benevolent figure, and an actual moral authority similar to a parent, he has to be actual in some sense. I repeat that I don't mean a parent proves and demands acknowledgement of Santa's full existence (notwithstanding aequalsa's unfortunate personal childhood experiences, as being entirely abnormal). I mean that when parents talk to their child about Santa, they say it as if he really is out there, and the child believes he really is out there (as I did). It should never go beyond that, and shouldn't be critically thought about because then the myth will dissipate. So why do it at all? Again, because only an actual Santa has any relevance as an authority or a benevolent figure, and at a very young age all of our complicated philosophical problems simply do not matter and have no relevance to a child. I repeat, that Santa's instantaneous travel is a problem, not a cause of delight, for parents, because otherwise Santa is an entirely possible figure. Personifying in him all of the benevolent qualities of men is simply a way to make clear to a child problems that are far beyond his age, so that he starts thinking and absorbing them long before he could conceptually arrive at them himself.

Okay, then I simply do not understand how you can present a make-believe without it having some substance to it. Perhaps SoftwareNerd's response to my post will clarify the issue. I mean, children play make-believe all the time but it is real to them when they play it, just as we adults engage in make-believe all the time (by watching movies) and it has some reality to us when we're doing it. The worst thing to do in the middle of a good movie is to start thinking that what we're seeing is not really happening, that when we see a great throne room in front of us it is actually just a set with cameras behind us, that this great hero is actually some guy who merely pretends and probably himself shares none of those qualities, that the great dramatic conflict is merely a clever plot device and actually has no significance since it's all fake anyway (since it deals with all fake characters), etc. The only way any of these things have significance is if we attach some reality to them, and stripping all reality from a make-believe destroys it. There is a role for fantasy in everyday life, which is not quite real but not quite fake either.

Okay so you make it clear that he doesn't "sincerely", in some full adult sense of the term, believes that an actual tooth fairy is real. But he clearly doesn't believe you are the one sneaking in a dollar bill while he's unaware, right? That's what I'm talking about, a balance between completely real, and completely fake. Please note that no one here, (or in history of Santa), has advocated teaching him as a completely real person, and insisting very powerfully that the child believe and understand how real he is. That's never happened.
Well this is a cultural point. Some cultures do have fantasy birthday celebrations and mythology, while having nothing about tooth fairies. In America we have a tooth fairy but no birthday storks. You have to remember that each new generation of parents doesn't somehow abstractly outline which and which myths it will teach, and which imaginary characters it will play make-believe with. It is a cultural issue, we live in a larger culture and generally adopt the fantasy creatures popular throughout the culture; if someone moves to a different country, they may choose to retain the old make-believe or adopt the ones in their new country, and no one will blame them for their choice. The over-arching point is that fantasy or make believe as such are okay, are in no way Jesus-like in hands of any reasonable parent, and so whichever ones you choose are entirely up to you.
I agree with you, but here we have different definitions for "real" and "make believe", hence our differing opinions. How you answer my response to your first quote determines where we'll go from here.

I haven't given much thought to the tooth fairy, but here the same principles as with Santa Claus would apply. Why has the tooth fairy been used all this time? What's been the point? You yourself describe it: "You lose a tooth, you get cash". So the point, as I understand it, and as I would use it if I were to use it, would be that natural change and growth in a little child is natural, and good. It's both a reward for the body going according to the natural flow of things, and a powerful example to the child that changes are okay, growth is okay, and even if there's blood from the tooth loss it's nothing to be worry about but instead should be celebrated.
So the tooth fairy celebrates nature, the natural progress of things, and adds even more benevolent moments to the child's life. It's ingenious, really. I'll seriously think about whether I'll be using it when I get children.